small business owners When it came to sources of
finance, 89% of businesses use bank current accounts, 50% use leasing or hire purchase to buy assets such as cars, plant and equipment, 40% have a overdraſt, 36% use invoice discounting to help release cash tied-up in unpaid in- voices, 28% have a bank loan and 12% have a commercial mortgage.
Underuse of mortgages However, when it comes to financing future business ac- tivity, nearly 40% say they will rely on their company’s cash reserves, rather than apply for external finance. Only 4% said they anticipated applying for a commercial mortgage. Approximately two thirds of respondents were aware of government-backed funding schemes, with nearly a fiſth having already applied for a grant and 8% planning on ap- plying during the year ahead. Overall, however, business owners were cynical about government
schemes, with
55% saying they’re a PR ex- ercise and a similar number believing they favour big busi- nesses. We wanted to understand
how business owners prefer to receive business information. Te internet now dominates, with three-quarters of busi- ness owners having no interest in receiving business informa- tion in any format other than through a website. Te only sector that was more likely to read brochures and leaflets was printing and publishing. Email has become an indis- pensible business tool but half of all respondents agreed that it had become a huge time soak for both them and their
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staff. Interestingly, in this year of the Queen’s Jubilee celebra- tions and the Olympics, more business owners thought that the Royal family benefit- ted British business than the Olympics.
Cash strapped Finally, we wanted to get a sense of what was causing business owners greatest con- cern about the future. A lack of orders and running out of cash topped their list, followed by slow payments and a world event which could have a neg- ative impact on the economy. So, in summary, what does
this tell us about business owners view of
the future
– are they optimistic or pes- simistic? Te answer is that they’re realistic: despite the economy being at a low ebb, most have an upbeat view of their company’s future pros- pects but acknowledge that issues such as late paying customers or an unforeseen global event could cause them problems. Te growing view that business owners prefer to pay down debt and rely on cash reserves also seems to be correct. And business owners still rely on their accountants for advice, so links between commercial mortgage advis- ers and accountancy firms are clearly important.
Slow lane Can the commercial mort- gage market expect an upturn in fortunes based on this re- search? Unfortunately not, but neither does the research paint a picture of continuing decline. Te prognosis ac- cording to owners of small and medium sized businesses appears to be a slow recovery.
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MORTGAGE INTRODUCER OCTOBER 2012 43
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